A very important question: ‘What is the most cost-effective and beneficial way to decarbonise Calderdale?’

7 October 2013

The Calderdale Mini-Stern report (you can download a summary here; the name refers to the pioneering study of the Economics of Climate Change published by Sir Nicholas Stern in 2006) was prepared in 2011 by Professor Andy Gouldson and colleagues at the Centre for Low Carbon Futures, University of Leeds as part of a commission covering all the individual districts in the Leeds City Region.

The report asked the question: ‘What is the most cost-effective and beneficial way to decarbonise Calderdale? In an attempt to address this problem, the report reviewed the cost and carbon effectiveness of a wide range of the low carbon options that could be applied at the local level in households, industry, commerce and transport. It then explored the scope for their deployment, the associated investment needs, financial returns and carbon savings, and the implications for the economy and employment. It did this by the expert modelling of all these factors.

Findings of the Mini-Stern report

The Potential for Carbon Reduction – Investments and Returns

By implementing a whole range of measures (which the report prioritises in detail according to their cost benefit and ability to reduce CO2 emissions) Calderdale by 2022 could reduce its carbon emissions from 1990* levels by 14.9% through cost effective investments that would pay for themselves (on commercial terms) over their lifetime, and then by 20.6% through cost neutral investments that could be paid for at no net cost to the Calderdale economy if the benefits from cost effective measures were captured and re-invested in further low carbon measures.

Impacts on Future Energy Bills

Calderdale’s calculated 2011 energy bill of £381 million per year is forecast to grow to £514 million by 2022, but with investment in all of the cost effective measures, this £133 million increase in the annual energy bill could be cut by £92 million (69% of the projected increase) whilst investment in all of the cost neutral measures would cut this by £124 million (93% of the projected increase). Calderdale could therefore insulate itself against projected energy price increases to a very large extent through investments in energy efficiency and low carbon options.

Wider Impacts on Employment and Economic Growth

Over ten years, the levels of investment needed to exploit all cost effective measures with employment generating capacity would lead (directly and indirectly) to the generation of 311 jobs and to growth in GVA of £14.77 million per year, and exploiting all the cost neutral measures would lead (directly and indirectly) to a further 365 jobs and to GVA growth of £16.1 million per year.

The impact on Calderdale’s Carbon Emissions

Background trends in economic growth combined with changes in the energy and carbon intensity of GDP, the impact of higher energy price increases on demand, and the decarbonisation of the national electricity system (which is an objective of national government) would in isolation result in a 21% drop in Calderdale CO2 emissions between 1990 and 2022. The exploitation of all of the cost effective low carbon options would then increase this to a 36% drop, and of the remaining cost neutral options to a 41%drop in Calderdale emissions between 1990 and 2022.

Conclusion

Taken together, what this expert modelling demonstrated is that carbon reduction could be undertaken here is Calderdale in a way that is financially cost-effective and economically beneficial, insulating us against forecast rises in energy costs, and so as to keep step with the equally challenging national CO2 reduction targets set by the Climate Change Act 2008. They provided the Council with a secure foundation on which to set its local -40% by 2020 CO2 reduction target.

Professor Gouldson’s view now in 2013

“If anything, the economic case for making the transition to a low carbon economy has become stronger in the last two years. Energy prices have stayed high and seem likely to remain so in years to come. The ways of reducing energy demand have continued to improve, with the prices of many technologies falling and experiences with installing and running them effectively accumulating. Ways of financing change have advanced rapidly, with new forms of investment and new business models (i.e. for large scale retrofit) becoming available. And evaluations of the impacts of such schemes have shown that they generate better results that have been predicted. Combine all of this with the advancing science on climate change– which calls for urgent action more strongly and more clearly than ever– and the case for action is absolutely clear.”

*The report calculates reductions in emissions from a 1990 baseline (for consistency with the UK national targets and international ones established by the Kyoto Protocol), whereas the Calderdale target baseline year is 2005 when local emissions measurements first become available. The two baselines are broadly compatible: UK CO2 emissions in 2005 were 94% of the 1990 total.